13th International Conference on Management of Technology, Washington, April 3-7, 2004 Does KM in endogamies differ from KM in exogamies? Dominique JOLLY and Nicolas ROLLAND CERAM Sophia Antipolis (France)

13th International Conference on Management of Technology, Washington, April 3-7, 2004 Where do we go? Definitions –Interfirms alliances –Endogamies vs exogamies –Knowledge Management (KM).

13th International Conference on Management of Technology, Washington, April 3-7, 2004 Where do we go? Definitions –Interfirms alliances –Endogamies vs exogamies –Knowledge Management (KM) Fishing –5 Hypotheses inferred from case studies.

13th International Conference on Management of Technology, Washington, April 3-7, 2004 Where do we go? Definitions –Interfirms alliances –Endogamies vs exogamies –Knowledge Management (KM) Fishing –5 Hypotheses inferred from case studies Conclusion –Endogamies strengthen existing knowledge while exogamies enable new knowledge to be created

13th International Conference on Management of Technology, Washington, April 3-7, 2004 Definition: Interfirm Alliances (Jolly, 2001) 1.each of the partners must accept they are losing some of their autonomy in order to pursue a common goal in a well-specified area Equity (or Non-Equity) Joint Venture JOINT CONTROL ALLY A ALLY B

13th International Conference on Management of Technology, Washington, April 3-7, 2004 Definition: Interfirm Alliances (Jolly, 2001) 1.each of the partners must accept they are losing some of their autonomy in order to pursue a common goal in a well-specified area 2.each partner has to pool a fraction of its own resources for cooperation to take effect Equity (or Non-Equity) Joint Venture JOINT CONTROL ALLY A ALLY B resources

13th International Conference on Management of Technology, Washington, April 3-7, 2004 Definition: Interfirm Alliances (Jolly, 2001) 1.each of the partners must accept they are losing some of their autonomy in order to pursue a common goal in a well-specified area 2.each partner has to pool a fraction of its own resources for cooperation to take effect 3.joint action should produce results that would not occur in the context of independent action results Equity (or Non-Equity) Joint Venture results JOINT CONTROL ALLY A ALLY B resources

13th International Conference on Management of Technology, Washington, April 3-7, 2004 Definition: Interfirm Alliances (Jolly, 2001) 1.each of the partners must accept they are losing some of their autonomy in order to pursue a common goal in a well-specified area 2.each partner has to pool a fraction of its own resources for cooperation to take effect 3.joint action should produce results that would not occur in the context of independent action 4.each partner should conserve a significant part of its global business outside the alliance results Equity (or Non-Equity) Joint Venture results JOINT CONTROL ALLY A ALLY B resources

13th International Conference on Management of Technology, Washington, April 3-7, 2004 Endogamy vs. Exogamy Basic assumption kind of expected benefits

13th International Conference on Management of Technology, Washington, April 3-7, 2004 Endogamy vs. Exogamy Basic assumption type of joint activity kind of expected benefits

13th International Conference on Management of Technology, Washington, April 3-7, 2004 Endogamy vs. Exogamy Basic assumption nature of the resources pooled into the alliance type of joint activity kind of expected benefits

13th International Conference on Management of Technology, Washington, April 3-7, 2004 Endogamy vs. Exogamy Basic assumption profiles of the allies nature of the resources pooled into the alliance type of joint activity kind of expected benefits

13th International Conference on Management of Technology, Washington, April 3-7, 2004 same profiles ADD similar resources scale effects Endogamy vs. Exogamy = Add or Combine Resources

13th International Conference on Management of Technology, Washington, April 3-7, 2004 same profiles ADD similar resources scale effects different profiles COMBINE differentiated resources symbiotic effects Endogamy vs. Exogamy = Add or Combine Resources

13th International Conference on Management of Technology, Washington, April 3-7, 2004 EndogamyExogamy Allies’ environments and value chains RelatedUnrelated Resources brought by allies Similar, same nature, substitutable.Differentiated, specific, idiosyncratic, non substitutable. Common actionAccumulation of identical resourcesCombination of differentiated resources Effects produced by pooling resources Size, scale, volume, market power, etc.Symbiosis, interbreeding Benefits of cooperationQuantitative complementarities: - reaching a critical mass; - reaching the optimum scale; - gaining scope economies; - increasing joint economies of scale; - spreading risks amongst members. Qualitative complementarities: - uniting buyer/seller; - combining different types of knowledge or competencies; - uniting separate lines of products or services; - merging distinct geographical territories. Examples - joint supply through partial merger of the procurement departments of two distribution companies; - drilling joint venture in the oil industry; - joint design and/or production of parts by cars manufacturers; - consortium established by a group of competitors in order to promote a given technical standard. - alliance of a car manufacturer and an aluminium producer; - Joint Ventures between Chinese and Western companies; - agreement between a large pharmaceutical company and a dedicated biotechnology firm; - cooperation between a mobile phone company and a media & utility company. JOLLY D. (2002), « Alliance strategy: linking motives with benefits », European Business Forum, Issue 9, Spring, pp

13th International Conference on Management of Technology, Washington, April 3-7, 2004 Knowledge Management Definition Completion of different processes including: –observation, –sharing, –creating, –learning, and –feedback transfer.

13th International Conference on Management of Technology, Washington, April 3-7, 2004 Literature / Phase ObservationSharingCreatingLearningFeedback Boisot (1995, 1998)  Grant (1996)  Hedlund (1994)  Huber (1991)  Nonaka (1991, 1994)  Spender (1996, 1998)  Knowledge Management Authors

13th International Conference on Management of Technology, Washington, April 3-7, 2004 EndogamiesExogamies BeforeObservation Partnership Sharing Creating Learning AfterFeedback Framework for analysis

13th International Conference on Management of Technology, Washington, April 3-7, 2004 Observation = to observe the knowledge embodied in the partner’s experience, to identify opportunities in the partner’s knowledge base Not a difficult task in endogamies, because partners belong to the same industry (example: ST Microelectronic + Philips) Difficult to implement in exogamies because of unrelated profiles (example: EHPT)

13th International Conference on Management of Technology, Washington, April 3-7, 2004 Sharing = to distribute, diffuse and disseminate knowledge in the alliance with the partner – or piecing together items of knowledge Partners are not prone to share knowledge in endogamies – except for operational issues (example: Deutsch Telecom + France Telecom) Sharing is the rationale of the alliance in exogamies (example: Sino-foreign joint ventures)

13th International Conference on Management of Technology, Washington, April 3-7, 2004 Creating = developing new knowledge with the partners Knowledge creation in endogamies is an extension of partner’s bodies of knowledge (example: Deutsch Telecom + France Telecom) Exogamies allow the combination of different bodies of knowledge for creating truly original knowledge (example: ST Microelectronic + Air Liquide)

13th International Conference on Management of Technology, Washington, April 3-7, 2004 Learning = acquiring new knowledge, integrating new knowledge into the knowledge-base and modifying routines or beliefs in relation with this new knowledge Endogamies offer very limited learning opportunities (example: Fiat/Lancia + Peugeot/Citroën) Exogamies might be a learning race (example: Renault + Matra Automobiles)

13th International Conference on Management of Technology, Washington, April 3-7, 2004 Feedback transfer = ‘return effect’ of the learning process within the alliance Quantity of knowledge transferred in endogamies is low (example: CFM International = General Electric + Snecma) but easily transfered Exogamies allow a lot of transfers but without any difficulty (example: HP + Nokia)

13th International Conference on Management of Technology, Washington, April 3-7, 2004 Conclusion: 5 hypotheses 1.Observation is much easier to implement in exogamy than in endogamy. 2.During cooperation, knowledge sharing in endogamy is impeded by competitive issues, which do not exist in exogamy. 3.While in endogamy, knowledge creation refers to an extension of existing knowledge; in exogamy it is truly new knowledge that is created. 4.There are fewer learning opportunities in endogamy than in exogamy. 5.Feedback transfer of knowledge is easier in endogamy than in exogamy as it does not modify the structure of the knowledge base.